NAHL GROUP PLC

Earnings Release • Sep 21, 2016

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RNS Number : 3748K

NAHL Group PLC

21 September 2016

21 September 2016

NAHL Group plc

("NAHL" or the "Group")

Interim Results

Performance in line with expectations led by strong growth in Critical Care division

NAHL, the leading UK marketing and services business focused on the UK consumer legal market, announces its Interim Results for the six months ended 30 June 2016.

Financial Highlights

•       Revenue up 1.3% to £25.8m (2015 H1: £25.4m)

•       Underlying operating profit up 24.5% to £8.8m (2015 H1: £7.0m)

•       Improvement in underlying operating profit margin from 27.7% to 34.0%

•       Profit before tax up 17.1% to £7.5m (2015 H1: £6.4m)

•       Excellent cash conversion of 95.7% (2015 H1: 95.5%)

•       Basic earnings per share up 5.6% to 13.2p (2015 H1: 12.5p)

•       Interim dividend of 6.35p per share (2015 H1: 6.25p)

Operational Highlights

•       Focus on a higher value blend of cases in Personal Injury division, NAH, with strengthened margins, despite an uncertain regulatory backdrop

•       Further progress with strategic diversification into complementary legal services markets

•       Bush, the Group's Critical Care division, has performed well and is trading ahead of plan

•       Fitzalan, the Group's Conveyancing division, has shown good organic growth in revenue and operating profits

•       Searches UK acquisition extends the conveyancing offering

Russell Atkinson, CEO of NAHL, commented:

"I am pleased to report a solid performance in the first half of the year, as the more diversified nature of the Group helped to drive improvements in our profitability. We saw a strong contribution from Bush, the Group's Critical Care division, whilst our conveyancing business also showed good organic revenue and profit growth, strengthened by the performance of Searches UK, which was acquired in January.

"NAH performed as expected, with our deliberate strategy to reduce volumes and focus on higher value case types helping to improve margins. We continue to plan for a range of outcomes as we await the anticipated publication of the Ministry of Justice's consultation.

"The underlying performance of the Group continues to benefit from our strategic diversification into complementary legal services markets and we have continued to make good progress on achieving our vision of being the UK's leading marketing and services provider in our chosen legal markets. The Group continues to deliver good levels of cash generation and the Board remains committed to a progressive dividend policy. Second half trading has commenced in line with our expectations."

Enquiries:

NAHL Group plc Russell Atkinson (CEO) Steve Dolton (CFO)	via FTI Consulting Tel: +44 (0) 20 3727 1000
Investec Bank plc (NOMAD & Broker) Garry Levin David Flin James Ireland David Anderson William Godfrey	Tel: +44 (0) 20 7597 5970
FTI Consulting (Financial PR) Oliver Winters Alex Beagley James Styles	Tel: +44 (0) 20 3727 1000

Notes to Editors

NAHL Group

NAHL Group plc is a leading UK marketing and services business focused on the UK consumer legal market. The Group comprises three divisions: Personal Injury (National Accident Helpline - NAH), Conveyancing (Fitzalan Partners - Fitzalan) and Ctitical Care (Bush & Company Rehabilitation - Bush). NAH provides outsourced marketing services in the personal injury market, Fitzalan, which includes Searches UK a leading conveyancing search provider, provides marketing services in the property market and Bush provides a range of specialist services in the catastrophic injury market.

More information is available at www.nahlgroupplc.co.uk and www.national-accident-helpline.co.uk

Chairman's Statement

I am pleased to report the Group's results for the six months ended 30 June 2016.

Summary of Financial Performance

NAHL Group plc ("NAHL" or "the Group") has performed in line with expectations, with revenue of £25.8m, up 1.3% (2015 H1: £25.4m), delivering underlying operating profit1 of £8.8m, up 24.5% (2015 H1: £7.0m). Profit before tax increased 17.1% to £7.5m, up from £6.4m and basic earnings per share were 13.2p, up 5.6% from 12.5p in the comparative period in 2015.

Trading Review

National Accident Helpline ("NAH"), the Group's Personal Injury ("PI") division, has performed as we expected and the NAH brand continues to rank as the most trusted and recognised in the PI sector. As previously highlighted, we have purposefully reduced case volumes, whilst the current regulatory uncertainty causes law firms to consider more carefully how much they invest in new PI cases. It is encouraging to note that the reduction in activity by our Panel Law Firms ("PLFs") has been in line with our expectations and demand appears to have stabilised through the period. In reducing our case volumes, we have proactively focused on a higher value blend of cases, which are attractive to our PLFs. As a result while our revenue has reduced, as planned, by 33.7%, margins have been strengthened and operating profits are only 6.8% lower than the same period last year. This is a creditable performance given the regulatory backdrop. We plan to maintain the current levels of operating performance in the second half of this financial year.

We still await the publication of the consultation, announced in the Chancellor's Autumn Statement in November 2015, into, inter alia, the potential transfer of PI claims of up to £5,000 to the small claims court and the removal of the right of individuals to claim general damages for minor whiplash injuries. Regrettably this has not yet been published and appears to have suffered further delays following the EU Referendum.  We continue to plan for a range of potential outcomes which we expect will be implemented in H2 2017 at the earliest. As part of our planning, we are building closer relationships with our key PLFs, and would expect that the new regulatory environment, when it emerges, will give us the opportunity to play a more pro-active role in the entire conduct and financing of a PI case. We intend to trial an initial small proportion of our enquiries in the final quarter of 2016 through different commercial and structural arrangements to those we normally deploy and will provide an update on this initiative at the Group's full year results.

Fitzalan, the Group's Conveyancing division, has shown good organic growth in revenue and operating profits in the first half, complemented by the acquisition of Searches UK in January 2016. The division operates in the UK residential property transactional market and is well placed to grow as consumer habits for procuring legal services continue to change. While we have seen reduced volumes in the immediate aftermath of the EU Referendum these volumes have started to recover more recently albeit from a low base and we expect to maintain our first half performance through the rest of the year. We remain confident of the longer-term outlook for the division.

Bush, the Group's Critical Care division acquired in October 2015, has performed well and is trading ahead of plan. Revenue of £5.2m has delivered operating profit of £1.8m. Our investment in business development has proved timely and new business initiatives are progressing as planned. We continue to invest in our quality reputation and therefore clinical independence is reinforced. We expect to see continued growth in the second half of this financial year.

Balance Sheet and Cash Conversion

Cash generation was again strong across NAHL, with a 95.7% (2015 H1: 95.5%) cash conversion of underlying operating profit into net cash flows from continuing operating activities before interest and tax. Whilst we expect this percentage to decline in the second half we still expect a good level of cash generation moving forward. Our balance sheet is robust and at the period end we had adjusted net debt2 of £9.6m, an increase of £1.3m since the year end, after paying the 2015 final dividend of £5.7m and cash consideration of £2.1m for the acquisition of Searches UK in January 2016.

We intend to utilise some of our strong cash flow to fund the trial of a small proportion of our enquiries through different commercial and structural arrangements, at NAH, as indicated above. Whilst these trials will result in a reduction in our cash conversion at NAHL, we believe it will underpin an accelerated start into any new regulated environment. Our dividend policy remains unaffected by this.

Interim Dividend

The Board has declared an interim dividend of 6.35p per share payable on 31 October 2016 to ordinary shareholders registered on 30 September 2016.

Outlook

At the Group level, second half trading has commenced in line with our expectations despite facing short term headwinds in both our PI and Conveyancing markets, both created by unusual and disruptive events.

Progress is unlikely to be seen in the PI division until the regulatory position starts to clarify and we can begin implementing plans for the future. We have right sized NAH to reflect the uncertain regulatory environment. The strategic decision to focus on higher value cases within NAH as well as our digital expertise, market leadership and brand recognition, means we remain well placed to capitalise on any emerging opportunities to ensure consumers continue to access justice fairly and cost effectively.

We expect our Conveyancing division to trade in line with first half performance, despite continued market volatility, and the Board expects to see growth in 2017 as confidence in the UK transactional market stabilises.

Our Critical Care division continues to trade well and we are optimistic about further growth prospects for this division.

Whilst we have had to deal with a number of market related issues in the year so far, overall, we expect 2016 to be a year of progress.

Steve Halbert

Chairman

20 September 2016

1	Underlying operating profit excludes share based payments, amortisation of intangible assets acquired on business combination and one-off items
2	Adjusted net debt comprises cash and cash equivalents, borrowings and other payables relating to a discontinued pre- LASPO product.

Management Report

NAHL is a leading UK marketing and services business focused on the UK consumer legal market. The Group comprises three divisions: Personal Injury (National Accident Helpline), Conveyancing (Fitzalan Partners and Searches UK) and Critical Care (Bush and Company Rehabilitation).

The Group has shown good growth in the period with Personal Injury performing as expected with good contributions from Conveyancing and particularly Critical Care which has performed ahead of plan.

Financial Overview

Revenue

Revenue increased by 1.3% to £25.8m (2015 H1: £25.4m). Within this, Critical Care, which was acquired in October 2015, contributed £5.2m (2015 H1: £nil). Revenue in Personal Injury, as anticipated, declined as we adjusted our model to focus on higher yielding enquiries.

Profitability

Underlying operating profit increased by 24.5% to £8.8m (2015 H1: £7.0m).

Personal Injury, as expected, showed a 6.8% decline to £7.0m (2015 H1: £7.5m) as the market continued to react to the Chancellor's Autumn Statement, made in November 2015, regarding potential changes in the small claims limit and general damages in RTA. Whilst the number of enquiries and therefore revenue declined, the division did optimise its marketing spend and delivered good margin improvement.

Conveyancing continued its good start since joining the Group in February 2015. With the acquisition of Searches UK in January 2016 the division has seen its operating profit increase by 113.4% to £0.7m (2015 H1: £0.3m). Whilst the division, in line with the market as a whole, has seen a slowdown in activity since the EU referendum we believe the division will still produce good growth this year.

Critical Care has made an excellent start delivering £1.8m of operating profit (2015 H1: £nil). The division has supplemented key operational management and increased overall staff numbers to underpin its strong quality ethos. It has also strengthened its business development activities and the Group is confident that the division will continue to increase its market share in this sector.

The Group remains committed to maintaining cost controls and has delivered an improvement in the underlying operating profit margin from 27.7% to 34.0%. Non underlying items of £1.0m (2015 H1: £0.5m) mainly relate to amortisation of intangible assets and share based costs.

Earnings per Share

Basic and diluted earnings per share for the period were 13.2p and 12.9p respectively (2015 H1: 12.5p and 12.3p).

Dividend

The Board has declared an interim dividend of 6.35p per ordinary share (2015 H1: 6.25p) which will be paid on 31 October 2016 to ordinary shareholders registered at the close of business on 30 September 2016. The policy to pay two thirds of its retained earnings each year, with one third of this at the interim stage, as a dividend remains the board's objective. The final payment is expected to be announced in March 2017 for payment in May 2017.

Cash and Balance Sheet

The Group had £9.6m of adjusted net debt at 30 June 2016 (2015 H1: £1.2m). This comprised the following:

	30 June 2016 £000	30 June 2015 £000	31 December 2015 £000
Cash and cash equivalents	6,522	9,324	10,056
Other interest-bearing loans and loan notes	(12,936)	(5,901)	(14,782)
Net (debt)/cash	(6,414)	3,423	(4,726)
Other payables relating to pre LASPO ATE product	(3,167)	(4,610)	(3,601)
Adjusted net debt	(9,581)	(1,187)	(8,327)

The Group continued to enjoy strong cash flow from operating activities and delivered a cash conversion of underlying operating profit into net cash flows from continuing operating activities before interest and tax of 95.7% (2015 H1: 95.5%).Whilst the overall percentage will see a decline in the second half we still expect the Group to deliver good levels of cash generation. The overall increase in adjusted net debt since June 2015 was primarily due to the acquisition of Bush and Company Rehabilitation in October 2015 which was partly funded from cash.

Russell Atkinson

Chief Executive Officer

Steve Dolton

Chief Financial Officer

20 September 2016

Consolidated statement of comprehensive income

for the 6 months ended 30 June 2016

	Note	Unaudited 6 months ended 30 June 2016 £000	Unaudited 6 months ended 30 June 2015 £000	Audited 12 months ended 31 December 2015 £000
Revenue	2	25,753	25,411	50,716
Cost of sales		(10,991)	(13,911)	(25,785)
Gross profit		14,762	11,500	24,931
Administrative expenses		(7,034)	(5,014)	(10,812)
Underlying operating profit		8,750	7,030	15,622
Share-based payments		(433)	(374)	(833)
Amortisation of intangible assets acquired on business combination	8	(533)	-	(259)
One-off items	5	(56)	(170)	(411)
Total operating profit	2	7,728	6,486	14,119
Financial income	3	10	35	59
Financial expense	4	(209)	(90)	(228)
Profit before tax		7,529	6,431	13,950
Taxation		(1,563)	(1,287)	(3,184)
Profit for the year and total comprehensive income		5,966	5,144	10,766

All profits and losses and total comprehensive income are attributable to the owners of the Company.

		Unaudited 6 months ended 30 June 2016	Unaudited 6 months ended 30 June 2015	Audited 12 months ended  31 December 2015
Basic earnings per share (p)	11	13.2	12.5	25.6
Diluted earnings per share (p)	11	12.9	12.3	25.0

Consolidated statement of financial position

At 30 June 2016

	Note	Unaudited 6 months ended 30 June 2016 £000	Unaudited 6 months ended 30 June 2015 £000	Audited 12 months ended  31 December 2015 £000
Non-current assets
Goodwill	7	60,362	43,726	59,238
Intangibles	8	8,780	484	8,452
Property, plant and equipment		339	105	259
Deferred tax asset		68	78	68
		69,549	44,393	68,017
Current assets
Trade and other receivables		9,235	5,658	8,044
Cash and cash equivalents		6,522	9,324	10,056
		15,757	14,982	18,100
Total assets		85,306	59,375	86,117
Current liabilities
Other interest-bearing loans and borrowings		(3,693)	(2,950)	(3,693)
Trade and other payables		(9,557)	(10,155)	(8,949)
Other payables relating to legacy pre-LASPO ATE product	2	(3,167)	(4,610)	(3,601)
Deferred tax liability		(1,916)	(101)	(1,738)
Tax payable		(1,909)	(1,319)	(1,976)
		(20,242)	(19,135)	(19,957)
Non-current liabilities
Other interest-bearing loans and borrowings		(9,243)	(2,951)	(11,089)
Total liabilities		(29,485)	(22,086)	(31,046)
Net assets		55,821	37,289	55,071
Equity
Share capital	9	113	103	113
Share option reserve		1,554	662	1,121
Share premium		14,271	-	14,262
Merger reserve		(66,928)	(66,928)	(66,928)
Retained earnings		106,811	103,452	106,503
Total equity		55,821	37,289	55,071

Consolidated statement of changes in equity

for the 6 months ended 30 June 2016

	Share capital £000	Share option reserve £000	Share premium £000	Merger reserve £000	Retained earnings £000	Total equity £000
Balance at 1 January 2016	113	1,121	14,262	(66,928)	106,503	55,071
Total comprehensive income for the period
Profit for the period	-	-	-	-	5,966	5,966
Total comprehensive income for the period	-	-	-	-	5,966	5,966
Transactions with owners, recorded directly in equity
Issue of new Ordinary Shares (note 10)	-	-	9	-	-	9
Share-based payments	-	433	-	-	-	433
Dividends paid	-	-	-	-	(5,658)	(5,658)
Balance at 30 June 2016	113	1,554	14,271	(66,928)	106,811	55,821
Balance at 1 January 2015	103	288	49,533	(50,000)	36,250	36,174
Total comprehensive income for the period
Profit for the year	-	-	-	-	5,144	5,144
Total comprehensive income	-	-	-	-	5,144	5,144
Transactions with owners, recorded directly in equity
Bonus issue of Capital reduction shares	16,928	-	-	(16,928)	-	-
Capital reduction shares cancelled	(16,928)	-	-	-	16,928	-
Capital reduction	-	-	(49,533)	-	49,533	-
Share-based payments	-	374	-	-	-	374
Dividends paid	-	-	-	-	(4,403)	(4,403)
Balance at 30 June 2015	103	662	-	(66,928)	103,452	37,289
Balance at 1 January 2015	103	288	49,533	(50,000)	36,250	36,174
Total comprehensive income for the period
Profit for the year	-	-	-	-	10,766	10,766
Total comprehensive income	-	-	-	-	10,766	10,766
Transactions with owners, recorded directly in equity
Bonus issue of Capital reduction shares	16,928	-	-	(16,928)	-	-
Capital reduction shares cancelled	(16,928)	-	-	-	16,928	-
Capital reduction	-	-	(49,533)	-	49,533	-
Issue of new Ordinary Shares	10	-	14,262	-	-	14,272
Share-based payments	-	833	-	-	-	833
Dividends paid	-	-	-	-	(6,974)	(6,974)
Balance at 31 December 2015	113	1,121	14,262	(66,928)	106,503	55,071

Consolidated cash flow statement

for the period ended 30 June 2016

	Note	Unaudited 6 months ended 30 June 2016 £000	Unaudited 6 months ended 30 June 2015 £000	Audited 12 months ended  31 December 2015 £000
Cash flows from operating activities
Profit for the year		5,966	5,144	10,766
Adjustments for:
Depreciation and amortisation		619	104	436
Financial income	3	(10)	(35)	(59)
Financial expense	4	209	90	228
Share-based payments		433	374	833
Taxation		1,563	1,287	3,184
		8,780	6,964	15,388
Increase in trade and other receivables		(823)	(1,792)	(813)
Increase in trade and other payables		364	1,380	226
Decrease in other payables relating to legacy pre-LASPO ATE product		(434)	(1,901)	(2,910)
Cash generation from operations	2	7,887	4,651	11,891
Interest paid	4	(209)	(90)	(216)
Tax paid		(1,735)	(1,464)	(3,127)
Net cash from operating activities		5,943	3,097	8,548
Cash flows from investing activities
Acquisition of property, plant and equipment		(151)	(6)	(195)
Consideration paid for the acquisition of subsidiaries		(2,091)	(3,662)	(33,681)
Intangible assets acquired		(14)	-	(51)
Cash acquired from business combination		293	626	5,572
Interest received	3	10	35	59
Net cash used in investing activities		(1,953)	(3,007)	(28,296)
Cash flows from financing activities
New share issue		9	-	14,272
Repayment of borrowings		(1,875)	-	(5,901)
New borrowings acquired		-	-	15,000
Bank arrangement fees for new borrowings		-	-	(230)
Dividends paid		(5,658)	(4,403)	(6,974)
Net cash used in financing activities		(7,524)	(4,403)	(16,167)
Net decrease in cash and cash equivalents		(3,534)	(4,313)	(3,581)
Opening cash and cash equivalents		10,056	13,637	13,637
Cash and cash equivalents at period end		6,522	9,324	10,056

Notes to the financial statements

1. Accounting policies

General Information

The half year results for the current and comparative period to 30 June have not been audited or reviewed by auditors pursuant to the Auditing Practices Board guidance of Review of Interim Financial Information.

These half year results do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2015 were approved by the Board of Directors on 21 March 2016 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 498 of the Companies Act 2006.

Having made due enquiries the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  For this reason, they continue to adopt the going concern basis in preparing the condensed set of financial statements.

The condensed set of financial statements was approved by the Board of directors on 20 September 2016.

Basis of preparation

Statement of compliance

The half year results for the current and comparative period to 30 June  have been prepared in accordance with IAS 34 Interim financial reporting as adopted by the EU and the AIM Rules of UK companies.  They do not include all of the information required for full annual financial statements and should be read in conjunction with the financial statements of the Group for the year ended 31 December 2015, which have been prepared in accordance with IFRSs as adopted by the European Union.

Use of judgements and estimates

The preparation of financial statements in conformity with IFRSs requires management to make judgements and estimates that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimates are revised and in any future years affected.

The preparation of the condensed set of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expense.  Actual results may differ from these estimates.

In preparing the condensed set of financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were of the same type as those that applied to the financial statements for the year ended 31 December 2015.

Significant accounting policies

The accounting policies used in the preparation of these interim financial statements for the 6 months ended 30 June 2016 are the accounting policies as applied to the Group's financial statements for the year ended 31 December 2015.

Use of non-GAAP measures

Underlying operating profit

The Directors believe that underlying operating profit provides additional useful information for shareholders on underlying trends and performance. This measure is used for performance analysis. Underlying operating profit is not defined by IFRS and therefore may not be directly comparable with other companies' adjusted profit measures. It is not intended to be a substitute for, or superior to, IFRS measurements of operating profit.

The adjustments made to reported operating profit are:

IFRS 2 Share Based Payments - non-cash Group Income Statement charge for share based payments. IFRS 2 requires the fair value of equity instruments measured at grant date to be spread over the period during which the employees become unconditionally entitled to the options. This is a non-cash charge and has been excluded from underlying operating profit as it does not reflect the underlying performance of the Group.

IFRS 3 (Revised) Business Combinations - intangible asset amortisation charges and costs arising from acquisitions. Under IFRS 3 intangible assets are required to be amortised on a straight-line basis over their useful economic life and as such is a non-cash charge that does not reflect the underlying performance of the business acquired. Similarly, the standard requires all acquisition costs to be expensed in the Group Income Statement. Due to their nature, these costs have been excluded from underlying operating profit as they do not reflect the underlying performance of the Group.

Other one-off costs - these relate to certain one-off costs associated with the Group's acquisition activities including any costs is relation to aborted acquisitions. These have been excluded from underlying operating profit as they do not reflect the underlying performance of the Group.

Adjusted net debt

The Directors believe that the adjusted net debt provides additional useful information for shareholders on underlying trends and performance. This measure is used for performance analysis. Adjusted net debt is not defined by IFRS and therefore may not be directly comparable with other companies' adjusted debt measures. It is not intended to be a substitute for, or superior to, IFRS measurements of net debt. Adjusted net debt comprises cash and cash equivalents, borrowings and other payables relating to a discontinued pre- LASPO product.

Business combination

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. The Group measures goodwill as the acquisition-date fair value of the consideration transferred, less the net of the acquisition-date fair values of the identifiable assets acquired and liabilities assumed, including contingent liabilities as required by IFRS 3.

Consideration transferred includes the fair values of assets transferred, liabilities incurred by the Group to the previous owners of the acquiree, equity interests issued by the Group, contingent consideration, and share-based payment awards of the acquiree that are replaced in the business combination. Any contingent consideration payable is recognised at fair value at the acquisition date. Subsequent changes to the fair value of contingent consideration that is not classified as equity are recognised in the income statement.

Transaction costs that the Group incurs in connection with a business combination, such as finder's fees, legal fees, due diligence fees, and other professional and consulting fees, are expensed as incurred.

Goodwill

Goodwill represents the excess of the fair value of the consideration given over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition.  Goodwill is not amortised but is tested for impairment annually and again whenever indicators of impairment are detected and is carried at cost less any provision for impairment. Any impairment is recognised in the income statement.

Other intangible assets

Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses.

Cost or valuation

Intangible assets arising from a business combination are recognised at fair value, amortised over their estimated useful lives and subject to impairment testing.

Amortisation

Intangible assets are amortised on a straight-line basis over their estimated useful lives as follows:

•	Technology related intangibles	-	5 to 10 years
•	Contract related intangibles	-	5 to 10 years
•	Brand names	-	5 to 10 years
•	Other intangibles assets	-	3 years

No amortisation is charged on assets under construction as these are not yet in use.

Depreciation

Depreciation is calculated to write off the cost, less estimated residual value, of property, plant and equipment by equal instalments over their estimated useful economic lives as follows:

•	Office equipment	-	3 to 5 years
•	Computers	-	3 years

2. Operating segments

	Personal Injury £000	Pre-LASPO ATE £000	Conveyancing £000	Critical Care £000	Other segments £000	Non underlying  items £000	Total £000
Period ended 30 June 2016
Revenue	15,864	-	4,655	5,234	-	-	25,753
Depreciation and amortisation	(39)	-	(84)	(18)	(478)	-	(619)
Operating profit/(loss)	7,005	-	685	1,815	(755)	(1,022)	7,728
Financial income	10	-	-	-	-	-	10
Financial expenses	-	-	(2)	(2)	(205)	-	(209)
Profit/(loss) before tax	7,015	-	683	1,813	(960)	(1,022)	7,529
Trade receivables	2,217	-	541	3,510	130	-	6,398
Segment liabilities	(6,508)	(3,167)	(1,298)	(1,131)	(620)	-	(12,724)
Capital expenditure	131	-	5	15	-	-	151
Period ended 30 June 2015
Revenue	23,913	-	1,498	-	-	-	25,411
Depreciation and amortisation	(86)	-	(18)	-	-	-	(104)
Operating profit/(loss)	7,517	-	321	-	(808)	(544)	6,486
Financial income	29	-	-	-	6	-	35
Financial expenses	-	-	-	-	(90)	-	(90)
Profit/(loss) before tax	7,546	-	321	-	(892)	(544)	6,431
Trade receivables	4,911	-	199	-	47	-	5,157
Segment liabilities	(6,669)	(4,610)	(483)	-	(3,003)	-	(14,765)
Capital expenditure	6	-		-	-	-	6
12 months ended 31 December 2015
Revenue	45,081	-	3,522	2,133	-	-	50,716
Depreciation and amortisation	(160)	-	(22)	(5)	(249)	-	(436)
Operating profit/(loss)	15,528	-	825	644	(1,375)	(1,503)	14,119
Financial income	49	-	-	-	10	-	59
Financial expenses	-	-	(2)	-	(226)	-	(228)
Profit/(loss) before tax	15,577	-	823	644	(1,591)	(1,503)	13,950
Trade receivables	2,646	-	215	3,351	-	-	6,212
Segment liabilities	(6,960)	(3,601)	(298)	(884)	(807)	-	(12,550)
Capital expenditure	82	-	113	-	-	-	195

Geographic information

All revenue and assets of the Group are based in the UK.

Operating segments

The segments used in reporting by the Chief Operating Decision Maker (CODM), being the Board, and considered relevant to the business are segmented on a divisional basis. These segments are:

Personal Injury

Revenue from the provision of enquiries to the panel law firms, based on a cost plus margin model, plus commissions received from providers for the sale of additional products by them to the panel law firms.

Pre-LASPO ATE

Revenue is commissions received from the insurance provider for the use of 'after the event' policies by panel law firms. From 1 April 2013, this product was no longer available as a result of LASPO regulatory changes. Included in the balance sheet is a liability that has been separately identified due to its material value. This balance is commissions received in advance that are due to be paid back to the insurance provider. No interest is due on this liability.

Conveyancing 

Revenue from the provision of online marketing services to target home buyers and sellers in England and Wales, offering lead generation services to panel law firms and surveyors in the conveyancing sector and the provision of conveyancing searches for solicitors and licensed conveyancers.

Critical Care 

Revenue from the provision of expert witness reports and case management support within the medico-legal framework for multi-track cases.

Other segments

Costs that are incurred in managing Group activities or not specifically related to a division and including share based payments.

Non underlying items

Costs associated with the acquisition of subsidiary undertakings, share based payments, amortisation charges on intangible assets recognised as part of business combination and IPO related costs.

Cash flows from operating activities

A reconciliation of operating profit to cash generation from operations has been presented below separately identifying net cash flows relating to Continuing operations (comprising cash flows associated with Personal Injury, Conveyancing, Critical Care and other segments), the Pre- LASPO ATE product segment and one-off items.

Reconciliation of operating profit to net cash flows from operating activities

	Continuing operations £000	Pre-LASPO ATE £000	Sub-total £000	Non underlying items £000	Total £000
6 months ended 30 June 2016
Operating profit	7,784	-	7,784	(56)	7,728
Amortisation on business combination	533	-	533	-	533
Equity-settled share-based payments	433	-	433	-	433
Underlying operating profit	8,750	-	8,750	(56)	8,694
Depreciation and amortisation	86	-	86	-	86
Increase in trade/other receivables	(823)	-	(823)	-	(823)
Increase in trade/other payables	364	-	364	-	364
Decrease in liabilities relating to pre-LASPO ATE product	-	(434)	(434)	-	(434)
Net cash flows from operating activities before interest and tax	8,377	(434)	7,943	(56)	7,887

6 months ended 30 June 2015
Operating profit	6,656	-	6,656	(170)	6,486
Amortisation on business combination	-	-	-	-	-
Equity-settled share-based payments	374	-	374	-	374
Underlying operating profit	7,030	-	7,030	(170)	6,860
Depreciation and amortisation	104	-	104	-	104
Increase in trade/other receivables	(1,792)	-	(1,792)	-	(1,792)
Increase in trade/other payables	1,371	-	1,371	9	1,380
Decrease in liabilities relating to pre-LASPO ATE product	-	(1,901)	(1,901)	-	(1,901)
Net cash flows from operating activities before interest and tax	6,713	(1,901)	4,812	(161)	4,651

12 months ended 31 December 2015
Operating profit	14,530	-	14,530	(411)	14,119
Amortisation on business combination	259	-	259	-	259
Equity-settled share-based payments	833	-	833	-	833
Underlying operating profit	15,622	-	15,622	(411)	15,211
Depreciation and amortisation	177	-	177	-	177
Increase in trade/other receivables	(813)	-	(813)	-	(813)
Increase in trade/other payables	226	-	226	-	226
Decrease in liabilities relating to pre-LASPO ATE product	-	(2,910)	(2,910)	-	(2,910)
Net cash flows from operating activities before interest and tax	15,212	(2,910)	12,302	(411)	11,891

3. Financial income

	Unaudited 6 months ended 30 June 2016 £000	Unaudited 6 months ended 30 June 2015 £000	Audited 12 months ended  31 December 2015 £000
Bank interest income	10	35	59
Total finance income	10	35	59

4. Financial expense

	Unaudited 6 months ended 30 June 2016 £000	Unaudited 6 months ended 30 June 2015 £000	Audited 12 months ended  31 December 2015 £000
On bank loans	209	90	216
Bank charges	-	-	12
Total finance expense	209	90	228

5. One-off items

	Unaudited 6 months ended 30 June 2016 £000	Unaudited 6 months ended 30 June 2015 £000	Audited 12 months ended  31 December 2015 £000
Legal and professional fees relating to acquisitions 1	56	146	570
Vendors consultancy fees on Fitzalan acquisition 2	-	24	24
IPO related costs 3	-	-	(183)
Total finance expense	56	170	411

1.  Legal and professional fees paid in relation to the acquisitions of Searches UK, Fitzalan Partners, BVC and Bush & Company Rehabilitation, including due diligence costs and stamp duty.

2.  Fees paid to former senior management of Fitzalan Partners for consultancy services provided in the business post acquisition.

3.  Previously recognised cost accruals in respect of the IPO of £183,000 were released in the year.

6. Acquisitions

Acquisition of Searches UK Limited

On 11 January 2016 the Group acquired the entire share capital of Searches UK Limited. The company is a leading conveyancing search provider in England & Wales predominantly for residential property transactions.

Acquisition of Bush & Company Rehabilitation Limited

On 14 October 2015 the Group acquired the entire share capital of Bush & Company Rehabilitation Limited. The company provides expert witness reports and case management support within the medico-legal framework for multi-track cases.

Acquisition of Best Value Conveyancing

On 30 June 2015, Fitzalan acquired the trading assets of Best Value Conveyancing (BVC). BVC provides lead generation services to law firms in the conveyancing sector.

Acquisition of Fitzalan Partners Limited

On 17 February 2015 the Group acquired the entire share capital of Fitzalan Partners Limited. The company is an online marketing specialist servicing home buyers and sellers in England and Wales.  The acquisition of Fitzalan represents the Group's first move into an adjacent consumer legal services market.

Fair values

The acquisitions had the following effect on the Group's assets and liabilities:

		Unaudited 6 months ended 30 June 2016 £000	Unaudited 6 months ended 30 June 2015 £000	Audited 12 months ended  31 December 2015 £000
Intangible assets		881	502	8,662
Tangible assets		6	-	53
Trade and other receivables		367	141	3,503
Cash and cash equivalents		293	626	5,572
Trade and other payables		(415)	(463)	(1,676)
Deferred tax liability		(176)	(101)	(1,738)
Net assets acquired		956	705	14,376
Goodwill arising on acquisition		1,124	3,829	19,341
Fair value of net assets acquired and goodwill arising		2,080	4,534	33,717
Cash consideration		2,080	3,662	32,274
Fair value of deferred consideration		-	872	1,443
Fair value of net assets acquired and goodwill arising		2,080	4,534	33,717

The Group incurred acquisition related costs of £56,000 (H1 2015: £146,000, Full Year 2015: £570,000) related to professional fees paid for due diligence, general professional fees and legal related costs. These costs have been included in one off items in the Group's consolidated income statement.

At 31 December 2015, £36,000 of deferred consideration remained outstanding in respect of the BVC acquisition, as at 30 June 2016, the final amount was settled at £11,000, with the resulting £25,000 of the deferred consideration being released.

For all acquisitions made in the year, fair values remain provisional, but will be finalised within 12 months of acquisition.

7. Goodwill

	Personal Injury £000	Conveyancing £000	Critical Care £000	Total £000
Cost
At 30 June 2015	39,897	3,829	-	43,726
At 30 December 2015	39,897	3,749	15,592	59,238
Acquired through business combination	-	1,124	-	1,124
At 30 June 2016	39,897	4,873	15,592	60,362
Impairment
At 30 June 2015	-	-	-	-
At 30 December 2015	-	-	-	-
At 30 June 2016	-	-	-	-
Net book value
At 30 June 2015	39,897	3,829	-	43,726
At 30 December 2015	39,897	3,749	15,592	59,238
At 30 June 2016	39,897	4,873	15,592	60,362

8. Intangibles

	Technology related £000	Contract related £000	Brand names £000	Other £000	Assets under construction £000	Total £000
Cost
At 30 June 2015	167	185	150	-	-	502
At 31 December 2015	167	7,746	749	47	4	8,713
Additions	-	-	-	10	4	14
Acquisitions through business combination	-	720	136	-	-	856
At 30 June 2016	167	8,466	885	57	8	9,583
Amortisation
At 30 June 2015	6	12	-	-	-	18
At 31 December 2015	22	214	23	2	-	261
Amortisation charge on business combination	10	474	49	-	-	533
Amortisation charge for the period	-	-	-	9	-	9
At 30 June 2016	32	688	72	11	-	803
Net book value
At 30 June 2015	161	173	150	-	-	484
At 31 December 2015	145	7,532	726	45	4	8,452
At 30 June 2016	135	7,778	813	46	8	8,780

The intangible assets recognised were acquired as part of the acquisitions of Fitzalan, BVC, Bush and Searches UK.

9. Share capital

	30 June 2016	30 June 2015	31 December 2015
Number of shares
'A' Ordinary Shares of £0.0025 each	45,270,937	41,150,000	45,265,000
	£000	£000	£000
Allotted, called up and fully paid
'A' Ordinary Shares of £0.0025 each	113	103	113
Shares classified in equity	113	103	113

10. Transactions with owners, recorded directly in equity

On 13 May 2016, 5,937 new ordinary shares with a par value of £0.0025 were issued due to the exercising of equity settled share based payments in respect of the SAYE scheme. These raised an additional £9,499 of funds for the Company, resulting in an increase to share premium of £9,484 and share capital of £15.

11. Basic earnings per share

The calculation of basic earnings per share at 30 June 2016 is based on profit attributable to ordinary shareholders of £5,966,000 (H1 2015: £5,144,000; Full Year 2015: £10,766,000) and a weighted average number of Ordinary Shares outstanding of 45,266,598 (June 2015: 41,150,000; December 2015: 42,040,643).

Profit attributable to ordinary shareholders (basic)

	Unaudited 6 months ended 30 June 2016 £000	Unaudited 6 months ended 30 June 2015 £000	Audited 12 months ended  31 December  2015 £000
Profit for the period / year attributable to the shareholders	5,966	5,144	10,766

Weighted average number of Ordinary Shares (basic)

Number	Note	Unaudited 6 months ended 30 June 2016	Unaudited 6 months ended 30 June 2015	Audited 12 months ended  31 December 2015
Issued Ordinary Shares at start of period	9	45,265,000	41,150,000	41,150,000
Weighted average number of Ordinary Shares at end of period	9	45,266,598	41,150,000	42,040,643

Basic earnings per share (p)

	Unaudited 6 months ended 30 June 2016	Unaudited 6 months ended 30 June 2015	Audited 12 months ended  31 December  2015
Basic earnings per share (p)	13.2	12.5	25.6

The Company has in place share-based payment schemes to reward employees. At the 30 June 2016, the LTIP, EMI and SAYE schemes are at a value that would reasonably result in the options being exercised. The incremental shares available for these schemes included in the diluted earnings per share calculation are 969,707 (June 2015: 693,609; December 2015: 938,719). There are no other diluting items.

Diluted earnings per share (p)

	Unaudited 6 months ended 30 June 2016	Unaudited    6 months ended 30 June 2015	Audited 12 months ended  31 December  2015
Diluted earnings per share (p)	12.9	12.3	25.0

12. Financial risk management

The Group's financial risk management objectives and policies are consistent with those disclosed in the financial statements for the year ended 31 December 2015. At 1 January 2016 and 30 June 2016 the Group held all financial instruments at Level 3 (as defined in IFRS 7 Financial instruments: disclosures) and there have been no transfers of assets or liabilities between levels of the fair value hierarchy.

13. Net (debt)/cash

Net (debt)/cash included cash and cash equivalents, secured bank loans, loan notes and preference shares.

	30 June 2016 £000	30 June 2015 £000	31 December 2015 £000
Cash and cash equivalents	6,522	9,324	10,056
Other interest-bearing loans and loan notes	(12,936)	(5,901)	(14,782)
Net (debt)/cash	(6,414)	3,423	(4,726)

Set out below is a reconciliation of movements in net cash during the period.

	30 June 2016 £000	30 June 2015 £000	31 December 2015 £000
Net decrease in cash and cash equivalents	(3,534)	(4,313)	(3,581)
Cash and cash equivalents net inflow from increase in debt and debt financing	1,846	-	(8,881)
Movement in net borrowings resulting from cash flows	(1,688)	(4,313)	(12,462)
Movement in cash in period	(1,688)	(4,313)	(12,462)
Net (debt)/cash at beginning of period	(4,726)	7,736	7,736
Net (debt)/cash at end of period	(6,414)	3,423	(4,726)

14. Related parties

Transactions with key management personnel

Key management personnel in situ at 30 June 2016 and their immediate relatives control 4.7 per cent (June 2015: 6.3 per cent, December 2015: 4.8 per cent) of the voting shares of the Company.

Key management personnel are considered to be the Directors of the Company as well as those of National Accident Helpline Limited, Fitzalan Partners Limited, Bush & Company Rehabilitation Limited, Searches UK Limited and any other management serving as part of the Executive Team.

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR EAKNEAALKEFF

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